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Marilyn Hartman Sullivan
True Blue Farmgirl
1138 Posts
Marilyn
Oxford
PA
USA
1138 Posts |
 Posted - Apr 21 2015 : 7:13:44 PM
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Diana - Term life insurance means that the insurance is written to cover the insured person for a specified TERM. Like 20 years, or 10 years, or 5 years. A person with say a kid in college might buy a 5-year term policy so that if they die before the child is done with school, there will be some insurance money for the child to finish school. Lots of young families buy term insurance, too, just so there will be money available for the widowed spouse to be able to care for any children left behind. But once the term is up, no more coverage. Term insurance is usually cheaper than whole life.
If you have a 10-year term policy, at the end of the 10 years, you have to re-qualify, and if your health has deteriorated, the next term will be at a higher premium.
Whole life, or permanent insurance, is just that - PERMANENT for your WHOLE LIFE. You buy the policy, and it covers you from now on, as long as you continue to pay the premiums. It is usually more expensive than term life, because eventually everyone will die during the term of the policy, which is forever. Some whole life policies also build up cash value over time, but that varies and you would have to ask your agent for specifics.
Lots of people advise you to "Buy term and invest the rest." As in buy term insurance because it is cheaper, but take the additional money you would have had to pay for whole life and invest it yourself. I guess that would make financial sense if you absolutely faithfully invested all that money. In my experience, however, good intentions just don't pan out and people just don't invest the extra money.
I was young when I bought my life insurance and I bought whole life. It has been there with death benefits for my survivors, but it has also been building cash value for many years and I don't ever have to think about renewing it. Someday I may cash it in and have a little extra something after having had the peace of mind that I was protecting my family from financial hardship.
This is probably more information than you needed, but that's the basic difference between the two. I would say to find an experienced reputable insurance agent (not someone brand new to the business or with some pyramid fly-by-night company) and get a good financial needs assessment done so you will have the facts you need to know which to buy and how much you need and can afford. Then you can sleep better at night! |
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Life Insurance
